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New York Forex Report: A Quiet Quarter End

New York Forex Report: A Quiet Quarter End

New York Forex Report: The market has traded in a skittish manner through the week, with trends failing to generate the required momentum to sustain themselves and reversals being fairly violent. This is best evidenced by GBPUSD, which started today very close to last Sunday’s open, in spite of the Scottish referendum vote, triggering of Article 50 and an intra-week range of almost 250 pips. Given this backdrop and month- and quarter-end flows, participation may be relatively low through today’s session. With EURUSD already under pressure, Euro zone inflation diving in March to 1.5% YoY from 2% February could be the trigger for another leg lower. Finally, we also get the PCE deflator, the Federal Reserve’s preferred measure of inflation, which is expected to move above 2%YoY ( ‘core’ is likely to be unchanged at 1.7%YoY). Following the mixed messages of late from the ECB, Coeure’s speech will be carefully watched. Fed’s Kashkari, among the most ‘dovish’ on the FOMC, is also due to talk in the afternoon.

USD Upwardly revised 4Q GDP reading in the US took center stage, offering some reprieve that growth in the US economy has not softened materially beyond consensus. Final print of US GDP growth was revised higher to 2.1% QoQ, up from a previous estimate of 1.9%. Markets took comfort in the quicker than initially estimated increase in consumer spending (+3.5% vs +3.0% QoQ), although this was mitigated by a slightly bigger net exports drag as imports increased at its fastest pace in two years, in another telltale signs of firm domestic activities. Fed speakers continued to reaffirm the case for further policy tightening. New York Fed Dudley said that “ risks for both economic growth and inflation over the medium to longer term may be shifting gradually to the upside”, while Dallas Fed President Kaplan views two more interest rate hikes this year.

EUR Eurozone’s economic confidence was a tad softer at 107.9 in March,hovering around the highest level in the past six years. In addition, business climate indicator was unchanged at 0.82 while consumer confidence index also stayed pat at -5.0 this month. The prelim German CPI index for March showed a moderated increase of 0.2%MoM, 1.6%YoY (from 0.6%MoM, 2.2%YoY in Feb), below the Bloomberg median forecast of 0.4%MoM, 1.8%YoY.

GBP The UK March GfK consumer confidence was at – 6 (unchanged from Feb) while the UK March Lloyd’s business barometer eased further to 35 (from 40 in Feb). UK Brexit Secretary David Davis said (30 Mar) that it is “quite likely” that UK Parliament will be asked to vote on whether UK should leave the European Economic Area (EEA), which gives non-EU countries Norway, Liechtenstein and Iceland rights to trade in the single market. The issue arose when Davis was asked in Parliament if it would be legally necessary for lawmakers to vote on taking Britain out of the EEA, which is a separate body from the EU.

JPY Japan’s CPI print ticked down to 0.30% YOY in February followed a quicker price gain of 0.40% YoY in January. Core inflation rose 0.10% last month (January: +0.20% YoY). Reflecting softer increase in broad based price pressure, household spending slipped 3.80% YoY in February after a 1.20% YoY drop in January, indicating diminishing impact of the government’s large stimulus program. The only bright spot was the surge in industrial output, which rose 2.00% MOM last month followed a 0.40% MOM drop in January.

Technical: 1-3 Day View – The breach of 1.07 support resets a downside bias with 1.0570 symmetry swing support the immediate downside objective, near term resistance is sited at 1.08, over 1.0860 opens 1.0969 equidistant swing objective.

Technical: 1-3 Day View – 1.2570 upside objective achieved potential for profit taking pullback to test support sited at 1.24 as this area supports expect a test of triangle resistance sited at 1.2640 only below 1.2370 concerns near term bullish bias.

1-3 Week View – While below 1.2864 bears set sites on 1.10 as the broader downside objective, a weekly closing breach of 1.2660 will set up a move to test the weekly bearish line in the sandRetail Sentiment: NeutralTrading Take-away: Neutral

Technical: 1-3 Day View – 111.75 range support breached the daily close below here suggests downside range break and opens 108.43 equidistant swing objective to the downside, near term resistance is sited at 112. A daily over 112 stems near term selling pressure.

1-3 Week View – as 110 weekly symmetry swing support survives on a weekly closing basis bulls will look for a grind higher to retest 115, a close below 108 which represents an equidistant swing from the cycle, negates the broader bullish theme.Retail Sentiment: NeutralTrading Take-away: Neutral

Technical: 1-3 Day View – Anticipated test of 119.30 attracts profit taking as 121 caps upside attempts bears target a test of 118.22 as the next downside objective. Only over 121.80 arrests near term selling pressure.

1-3 Week View – As symmetry swing support sited at 117.69 survives on a closing basis bulls will continue to target weekly symmetry swing resistance sited at 124.42, a weekly close above here would set a broader base for further upside.Retail Sentiment: NeutralTrading Take-away: Neutral

Patrick has been trading for the past ten years. After liquidating several accounts in his early days he stopped 'gambling' and applied himself as a student of risk. Self taught and more self aware thanks to Mr Market. Patrick applies simple technical strategies based around market price and time structure to identify high probability trade locations.